Public views of government support of farmers (CNW Group/Conference Board of Canada)

OTTAWA, Dec. 3, 2012 /CNW/ - The Canadian food industry is economically
viable, and would be even more competitive if federal and provincial
governments allowed firms to operate in an open marketplace, according
to a Conference Board of Canada report for its Centre for Food in Canada.

To help food companies grow and prosper, Canadian governments should
gradually remove agriculture support programs and focus their attention
on areas of public interest that are not properly addressed by
competitive markets.

"The areas that require greater government attention include those in
which Canada has had numerous high-profile challenges and shortcomings,
including food safety, healthy food, diet-related chronic disease, and
the environment," said Michael Bloom, Vice-President, Organizational Effectiveness and Learning at the
Conference Board.

Taken as a whole, the sky is the limit for the food sector, and the
biggest opportunities are international. Canada's population and demand
for food are growing slowly compared to less-developed countries, and
most of these countries are net importers of food.

Canada starts from a strong position: it is already one of only a
handful of countries that is a major net exporter of food. Canadian
governments and food companies face the strategic choice of whether to
position themselves to capture rapidly growing foreign demand or focus
on serving the slow-growing Canadian market.

Six actions could further improve the viability of Canada's food
economy.

Expand the sources of capital - Too little non-bank capital flows into the agricultural sector at
present. Part of the challenge to increasing the capital available to
agriculture is to overcome the view that farms should only be family
businesses. The report's case studies illustrate how agricultural
enterprises can create innovative partnerships with capital investors.
Canada has a well-developed financial sector and having capital funds
invest more in primary agriculture would give the industry a
much-needed boost.

Borrow approaches from other sectors to expand internationally - Companies in the energy, forestry, and mining industries are focusing
on new markets; the food sector can learn from the experience of these
commodity-based businesses.

Improve firm and farm performance by enhancing management capacity— Agriculture is one of the most highly regulated and planned sectors of
the Canadian economy, with numerous significant subsidies and trade
barriers. Nevertheless, the majority of food companies operate in
competitive markets, where management decisions have greater influence
on a firms' bottom-line performance. Thus, the viability of Canadian
food companies depends much on the competence of food company
management. Government policy, meanwhile, should remove barriers that
prevent successful food companies from expanding their operations.

Reform government support programs - Since 2003, Canadian consumers and governments provided an estimated
$81.9 billion in total support to the agricultural sector, including
$20.7 billion in market price support to milk producers. As described
in another Conference Board report, Canada's Supply-Managed Dairy Policy: How Do We Compare?, these programs serve neither the industry nor Canadian consumers well.

Channel government efforts to address public interest issues that build
trust in the food system - Ideally, government efforts and spending should be focused on areas of
genuine public interest that are insufficiently addressed by markets,
such as food safety and environmental performance. Canadians expect
safe and healthy food - governments should work with the industry to
build trust in the food system.

Improve Canadians' economic literacy - Canadians need to be made aware that the country's food output is
growing rather than falling, that Canada is one of the few long-term
net exporters of food, and that rising exports would not put Canadians'
food security at risk because food suppliers will naturally find
benefits in servicing the domestic market first.

The report is one of 20 being prepared by the Conference Board's Centre for Food in Canada. The principal goal of the Centre is to engage stakeholders from
business, government, academia, associations, and communities in
creating a Canadian Food Strategy —one that will meet the country's need for a coordinated, long-term
strategy on industry prosperity, healthy and safe food, consumer
security, and environmental sustainability. View video commentary about the Canadian Food Strategy.